Kuwait is preparing to implement an agreement between oil exporting countries in an effort to support crude prices by slashing production, according to media reports. 

Oil Minister Khaled Al Fadhel said Kuwait has cut its own production output by a percentage more than necessary to effectively achieve the objective. “The compliance of Kuwait was close to 160% last July, ” he told a local news agency. 

Crucially, in the current situation it is important to stop inventories from excess oil production resulting in falling prices. 

Despite excess production, oil prices increased slightly on Monday. This could be as a result of US-China trade war and anticipation that global suppliers would reduce production in crude, analysts said. International benchmark Brent Crude futures at $58.75 a barrel, an increase of 22 cents from the previous settlement. 

However, Al Fadhel said fears of global economic downturn largely impacting crude prices are ‘exaggerated’. That said, crude demand globally should pick up pace in the second half of the year, while simultaneously reducing excess in oil inventories. 

“What we have noticed recently is a different perception of risk in different geographies,” Emily Ashford, executive director of energy research at Standard Chartered said. “Often the price reactions during Asia or London trading are reversed during US trading. Prices seem to be following that pattern today.”

Opec, Russia and other non-Opec producers agreed to cut output by 1.2 million barrels per day effective January 1 for six months. 

Analysts believe that more output reductions are required to support prices. This is mainly because several forecasters and governments predict a slowdown in oil demand growth and  global economy on the whole.